Turkey’s $16.29bn real estate market
With a booming tourism sector and rising economy, Turkey has soon become a hotspot for modern real estate. Construction Business News ME examines the market and how it could affect countries within the GCC
As Turkey’s thriving real estate sector gets international attention, it still remains a hotspot for most GCC investors.
“In 2014, Gulf investors spent $4.3bn in Turkish real estate, reaching a total investment influx of $16.29bn over the past six years,” says Wouter Molman, director of Cityscape Group. According to him, Turkish participation in Cityscape Global has grown by 50% this year and there are no signs of it slowing down. This year’s Cityscape Global welcomed more than 50 Turkish exhibitors.
Turkish Statistical Institute reported that the number of house sales to international investors increased 22% in the first half of 2015 compared to the same period last year.
Diana Doğan, head of research, CBRE Turkey calls the country a “second home holiday market” with a significant increase in GCC investments in the country’s northwest, particularly the Marmara Sea and Black Sea regions, as well as Istanbul, Bursa and Yalova.
“Mediterranean coastal cities and Istanbul invite GCC investors due to their close links with the region both geographically and culturally,” adds Molmab.
Fatih Ergüven, managing partner at Reality Port Istanbul says that Turkey’s strategic location and favourable climate have made it an attractive hotspot for investors. “In the last three years real estate investment has become the centre of attention for both domestic and overseas investors and it has now established itself as one of the leading real estate markets in the world.”
Uğur Dumankaya, board of directors and chairperson at Dumankaya, describes Istanbul as an attractive real estate market for foreign investors. “With its economic stability, social welfare, geographical position and return on investment all pointing in the right direction, buyers from around the world are flocking to take ownership of prime developments in the city and surrounding areas.”
He says that from 30% of Dumankaya’s total sales are to foreign investors, the majority from the Middle East and Gulf countries.
Ceyda Carmikli, executive board member of Nurol REIT, says that with the reciprocity law in affect, there has been a major influx of GGC investment in Turkey. “Just by the example of Nurol Holding and its sister companies, it is evident that Turkish companies have raised the bar high for other construction and real estate companies on an international scale.”
İbrahim Kahraman, chief financial officer at KOY urges that Turkish companies have a lot to offer to GCC countries, because due to their growing populations and their need to diversify their economies. “They are looking at investments in new affordable and middle-segment housing supply and major infrastructure projects.”
Kahraman observes that the Turkish residential real estate market has shown high and resilient growth in recent years due to consistent demand generated by the growing population and the necessity to renew the old housing stock up to the standards of the rising middle class and the earthquake code in effect.
Carmikli states that Turkey’s residential property market is now one of Europe’s best performers due to the country’s beneficial geographical location. “Being in the middle of Europe and the Middle East, widespread urban renewal and development; large capacity and strength in construction, population growth and demographic advantage, and ease of doing business, all contribute to making it a lucrative market.”
Demirhan says that one of the most anticipated projects in Turkey, released at this year’s Cityscape Global, has been the Istanbul Financial Center. “It is going to be the biggest regional international financial centre and placed strategically in between Singapore, Hong Kong and Japan, and New York and London.”
Carmikli analyses that the strategic plans and future projects in the pipeline offer huge potential for investors. “Turkey is also the 6th most popular tourist destination in the world, making it an ideal investment location.”
In contrast with the UAE, she says that Turkey’s real estate market secures investments through the reciprocity law. “This law permits foreigners to acquire property in Turkey unconditionally, and be given the same rights and policies on their investments as the locals. The passing of the law has brought in huge revenue to the Turkish government in the form tourists, and foreign investors will also receive a residency permit for one year.”
“After China, Turkey is the second largest construction industry,” says regional director at Agaoglu, Idris Demirhan. “Turkey has a population of eight million, but we still need five million more residential units.”
The big demand for properties, he attributes to people’s need for newer homes, lifestyle, and compound projects. “The population is growing, demand is growing, but the supply has been less which is why we have one of the biggest construction markets today.”
According to Kahraman the Turkish construction industry has a proven track record with developing and executing complex projects undertaken in difficult political, geographic and market conditions in regional and international markets.
He observes: “Political and business relations, cultural affinity and past experience provide an important competitive advantage for Turkish construction companies in regional markets. This advantage is visible from the large volume of construction and development projects undertaken by Turkish contractors and developers in GCC countries as well as the Turkish and Russian markets.”
Carmikli says that the Turkish market for construction and real estate are highly competitive, and successfully so. “Many of them have internationalised, and set offices in other countries to cater to their clienteles from those regions.”